Starmer has suffered a blow in row over his ‘tractor tax’

Sir Keir Starmer has suffered a new blow in the row over his “tractor tax” after the leader of the UK’s unions backed family farms. In an exclusive interview with The Independent, TUC general secretary Paul Nowak threw down the gauntlet to the Labour leader to prove the case for the controversial change to inheritance tax. In a surprise intervention, Mr Nowak revealed his fears about chancellor Rachel Reeves’s tax raid, raising concerns about the consequences for hardworking families across Britain. “I’m worried about the impact of that on small farmers,” he told The Independent. “I know that for some small employers, national insurance contributions will also be a worry next year, particularly for those companies operating on small profit margins.

“Anyone would be worried,” he continued, when asked about the fears of family farmers, who have taken aim at the government with a series of protests in recent months. “You wouldn’t want the policy to impact on small family farms, because that was never the intention. The onus will be on the government to demonstrate that this doesn’t have the impact that some fear it will have.”

Responding to his warning, Tory MP Sir Geoffrey Clifton-Brown, himself a farmer, said Mr Nowak was “correct to be worried about the hugely damaging impact of Labour’s tax increases on family farms”.

“I represent constituents whose farms have been in their families for generations but will now have no option but to sell up,” he told The Independent. “This is disastrous for them and their families and local businesses they support; disastrous for farming, because they are at the heart of animal-friendly welfare; and disastrous for the country, because small farms have some of the most important biodiversity.” Mo Metcalf-Fisher, head of external affairs at the Countryside Alliance, told The Independent that Mr Nowak’s concerns are “echoed across the farming sector”.

“As each week passes, more and more experts are issuing warnings about this hated policy, and as we enter 2025, Rachel Reeves and her Treasury team must put ego aside, accept they have got this one wrong, and work with the rural sector to find a way forward in a way that does not throw family farms under the bus,” he added.

And the president of the National Farmers’ Union (NFU), Tom Bradshaw, added: “Mr Nowak is right to be concerned about the impact of the family farm tax, and we welcome his comments.” Union boss Mr Nowak indicated he had less sympathy for those who had bought farmland in an attempt to avoid inheritance tax. Earlier this month, the prime minister admitted to MPs that the changes were not, as previously claimed by ministers, intended to stop avoidance by the super-wealthy, but were simply to raise revenue. Campaigners argue that the tax, due to be introduced in 2026, will have a much broader impact on the rural economy. The NFU estimates that between 2,000 and 2,500 farms will be affected every year, which would mean as many as 70,000 in a 30-year period.

Mr Nowak added that while ministers, who dispute the figures, argue that the tax changes will have very little impact on small farms, “they will want to test that out and make sure that that isn’t the case”. Overall, though, he said he thought the Budget was “the right thing to do for the economy, because we do desperately need that investment in our public services and we all benefit from it, including those farmers and including those firms.”

His comments on the tax come after a new wave of protests was announced this week, targeting Labour MPs in rural areas. Demonstrations including tractor rallies are expected to take place on 25 January in communities away from the Westminster bubble, with roadside banners also being put up along main roads to catch MPs’ eyes as they travel over the Christmas period. The fresh protests suggest that anger over the tax is not going away, and the intervention of a senior union figure like Mr Nowak indicates that concerns over the policy are broad.

Under the changes, farms valued at £1m or more will be subject to 20 per cent inheritance tax. The Treasury claims that with tax allowances taken into consideration, only farms worth £3m will be affected, amounting to just 28 per cent of family farms. But figures from the Department for Environment, Food and Rural Affairs appear to suggest that as many as 66 per cent could be hit. A government spokesperson said: “Our commitment to farmers remains steadfast - we have committed £5bn to the farming budget over two years, including more money than ever for sustainable food production, and we are developing a 25-year farming roadmap, focusing on how to make the sector more profitable in the decades to come.

“Our reform to agricultural and business property relief will impact around 500 estates a year. For these estates, inheritance tax will be at half the rate paid by others, with 10 years to pay the liability back interest-free. This is a fair and balanced approach, which fixes the public services we all rely on.”